Fun day on Wall Street

[Parkbandit]

Should be a fast and furious day, given that S&P downgraded the outlook for the United States to negative (from stable).

[NocturnalRob]

My daily email around the office included the phrase: "The market is going to get stomped today." Not looking good so far.

[Warriorbird]

Oh hell yes. Though I feel dirty about it.

[NocturnalRob]

ultrashorts are the easy word of the day.

[WRoss]

Tomorrow, I will be buying S&P. Hopefully Southern Company (SO) drops down to 35ish so I can pick up those shares I sold off this time time last year.

[NocturnalRob]

Hopefully Southern Company (SO) drops down to 35ish so I can pick up those shares I sold off this time time last year.
No chance. Electricity is too strong right now, especially after the quake in Japan. I can't see this dropping the requisite 6% to get down to $35ish.

[WRoss]

Why do you always shattet my dreams

[NocturnalRob]

Why do you always shattet my dreams
Because I hate bad spellers.

[DoctorUnne]

The market could drop 10% and still be overpriced.

[NocturnalRob]

The market could drop 10% and still be overpriced.
Can you tell me what you're shorting so I can buy?

[DoctorUnne]

Can you tell me what you're shorting so I can buy?

I'm shorting your understanding of investing.

[NocturnalRob]

I'm shorting your understanding of investing.
No wonder you're losing money. I'm going to go ahead and confidently say you don't know your ass from your elbow.

edit: I'm operating under the assumption that you're short the market, as you believe the market could lose 10% and still be overvalued. How's that been working for you over the past 2 years?

[Warriorbird]

In my experience sorting specific stocks or sectors is MUCH safer. Not that shorting is ever safe.

[NocturnalRob]

In my experience sorting specific stocks or sectors is MUCH safer. Not that shorting is ever safe.
Eh, if you know what you're doing, and like following macrotrends, you can typically invest in market indices somewhat safely. Of course, I say that after getting crushed in February. Fortunately, March was good, and April has been cake so far (knock on wood).

[DoctorUnne]

No wonder you're losing money. I'm going to go ahead and confidently say you don't know your ass from your elbow.

edit: I'm operating under the assumption that you're short the market, as you believe the market could lose 10% and still be overvalued. How's that been working for you over the past 2 years?

First of all, I'm guessing you're on the sellside.

Second of all, I'm not short the market. I only short specific stocks. I just believe the stock market is overvalued, and I could make a better case for that than you could for the stock market being undervalued. I could be wrong, and I could be right but the market could go up anyway. I don't make a directional bet on the market because I'm not smart enough to do that most of the time, and neither are you. I short to hedge and because I can identify shorts that will underperform my longs. I'm still net long.

As for the past 2 years comment, don't be obtuse. The market's been flat for the past 10 years.

[AnticorRifling]

http://i813.photobucket.com/albums/zz60/CosmoKramer121/Stop_being_obtuse_copy.png

[NocturnalRob]

As for the past 2 years comment, don't be obtuse. The market's been flat for the past 10 years.
Granted, the DJIA is only one market index, but...you're fucking wrong.

http://i411.photobucket.com/albums/pp194/nocturnalrob/DJIA-10Years.jpg

[Bobmuhthol]

Not that shorting is ever safe.

It's no less safe than being long. You can still be long and not have the cash to cover your position.


The market's been flat for the past 10 years.

What the hell are you talking about?

[AnticorRifling]

It's no less safe than being long. You can still be long and not have the cash to cover your position.





That's what she said.

[DoctorUnne]

Granted, the DJIA is only one market index, but...you're fucking wrong.

I was referring to 12/31/00 to 12/31/10. But even using your data, that's less than 2% a year. I'd call that flat. It's negative in real terms.

[DoctorUnne]

It's no less safe than being long

Uhhh, while you're right about needing collateral even when you're long, being short is still riskier. When you're short your exposure grows as the trade moves against you, unlike with a long. You're also paying the borrowing cost and any dividends that accrue while you're short, so there's a negative income component to it.

[Bobmuhthol]

I was referring to 12/31/00 to 12/31/10. But even using your data, that's less than 2% a year. I'd call that flat.

Right, and that's because you have no idea what you're talking about. Unless for some reason someone bought the market on 31 Dec 2000 and held it until 31 Dec 2010 with no intermediate transactions (why?), the market was in no way flat for anyone.


When you're short your exposure grows as the trade moves against you, unlike with a long.

This is only problematic in the most extreme cases. Either way, you're out the price movement.


You're also paying the borrowing cost and any dividends that accrue while you're short, so there's a negative income component to it.

You pay a fee for purchasing a stock too, so the "borrowing cost" is nothing unique to short sellers. Being long requires financing the position; being short doesn't. And yes, it's certainly riskier to short dividend-paying stocks, as it should be. Not every stock pays dividends.

[DoctorUnne]

I never said the market didn't move at all over the past ten years. I said it was flat over the past ten years, i.e. its value is roughly the same today as it was ten years ago. Maybe in your poindexter language that means the same thing, but ask anyone on Wall Street and they'd understand what I meant and would say it the same way.

You don't know shit about shorting stocks. The fee for purchasing a stock is a one-time commission paid to a bank or in your case the Fidelity broker administering your $10,000 PA. The borrowing cost from shorting a stock is an ongoing interest cost paid to your prime broker in the form of forgone interest on the cash you generate. from the short sale. One is a small fraction of a percent and is paid once. The other can be 3-4% or more for illiquid stocks with a high short interest and is an annualized cost for as long as you're short the stock.

And if you think shorting doesn't require financing the position, you've never shorted a stock. If you want to short $100 worth of stock, you have to put $50 in incremental cash into your account as collateral. That collateral is marked to market; if the stock trades up you have to post additional collateral such that you're still at 50%.

/school

[Bobmuhthol]

Having $50 in an account != financing a position. Owning cash and borrowing are not the same thing.

Also, anyone on Wall Street better understand that "flat" implies low volatility, not fucking insanely large volatility (like we saw in the last 10 years). I trust you don't hang out on Wall Street.


You don't know shit about shorting stocks. The fee for purchasing a stock is a one-time commission paid to a bank or in your case the Fidelity broker administering your $10,000 PA. The borrowing cost from shorting a stock is an ongoing interest cost paid to your prime broker in the form of forgone interest on the cash you generate. from the short sale. One is a small fraction of a percent and is paid once. The other can be 3-4% or more for illiquid stocks with a high short interest and is an annualized cost for as long as you're short the stock.

Yeah, in a retail account, sure, but that's also a brokerage policy. Institutions don't pay interest on short sales, which I guess explains your guess that Rob is "on the sellside."

[4a6c1]

http://www.pollsb.com/photos/o/15367-pizza.jpg

Pizza baby thinks this thread is GREAT.

[Warriorbird]

It's no less safe than being long. You can still be long and not have the cash to cover your position.

I don't disagree with any of that. I'd never suggest the stock market to anybody in any way for "safety."

[DoctorUnne]

I trust you don't hang out on Wall Street.

No, I don't. I work at a hedge fund. Much better. I did work on Wall Street when I was a banker and it blows.

And institutions (hedge funds, prop desks at banks before Dodd-Frank) certainly do pay to short stock. Like I said, they pay in forgone interest on the short sale proceeds. The more illiquid the stock or the higher the short interest, the more it costs.

[Bobmuhthol]

I guess Hull and Black-Scholes lied to me all these years.

[Drew]

That's funny, Rob, Doc Unne and myself are all in the hedge fund industry. Who would have thought the PC was so investmenty.

[DoctorUnne]

Believe it or not I actually covered video games last summer. That was pretty sweet. This was me trying to do primary research on ATVI haha

http://forum.gsplayers.com/showthread.php?t=53712

[NocturnalRob]

Your unicorn knew. Your unicorn knows everything.

Now ask that motherfucker what corn is doing for the next 6 months. And pork bellies, bitch!

[Inspire]

Any forecasts for bacon?


hehehe

[Anebriated]

Your unicorn knew. Your unicorn knows everything.

Now ask that motherfucker what corn is doing for the next 6 months. And pork bellies, bitch!

Okay, pork belly prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the pork belly contracts are saying, "Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain't gonna f... my wife ain't gonna make love to me if I got no money!" So they're panicking right now, they're screaming "SELL! SELL!" to get out before the price keeps dropping. They're panicking out there right now, I can feel it.

[Sinanju]

I'm investing in rope. I see many people using it in the near future.

[Paradii]

I only invest in frozen orange juice concentrate.

[Drew]

Your unicorn knew. Your unicorn knows everything.

Now ask that motherfucker what corn is doing for the next 6 months. And pork bellies, bitch!

Sorry my unicorn only trades ETFs.




BTW, I'm bearish but almost entirely cash. I don't believe in shorting (this is my personal trading and not a reflection of what my company is or isn't doing).

[Parkbandit]

BTW, I'm bearish but almost entirely cash. I don't believe in shorting (this is my personal trading and not a reflection of what my company is or isn't doing).

Real Estate and metals. Cash won't be worth shit with the impending inflation.

[Delias]

Real Estate and metals. Cash won't be worth shit with the impending inflation.

Luckily guns and ammo are always a sound investment strategy.

[AnticorRifling]

Luckily guns and ammo are always a sound investment strategy.

I don't think that magazine will increase too much in value, not even the earlier issues.

[Delias]

I don't think that magazine will increase too much in value, not even the earlier issues.

It may not, but it does make it easier to take the gold from the guy who invested in gold and no guns. Just sayin'.

[Parkbandit]

It may not, but it does make it easier to take the gold from the guy who invested in gold and no guns. Just sayin'.

If the guy is a dog maybe. I've never been frightened by a rolled up magazine.

[Delias]

If the guy is a dog maybe. I've never been frightened by a rolled up magazine.

Hah... I took it to be magazine as in the magazine that holds the bullets- I didn't even think of the reading material.

[Parkbandit]

http://www.loveleaf.net/rcmag/image/guns_and_ammo_magazine.jpg

[NocturnalRob]

If oil drops around 1-2% today, I'll be happy.

[Parkbandit]

If oil drops around 1-2% today, I'll be happy.

I won't be.

Didn't Saudi Arabia say that they will slow down production?

[NocturnalRob]

Didn't Saudi Arabia say that they will slow down production?
I thought he said that the high prices were unjustified, and that there was a massive surplus.

[Anebriated]

I thought he said that the high prices were unjustified, and that there was a massive surplus.

Theres a large surplus and our refineries are only working at 80%. Gas prices are high because the oil speculators are saying it will be at this price eventually which continues to drive the price higher than it should be earlier than it should be. Oil futures are fucking our economy.

btw enjoy the 1st quarter numbers coming from the oil sector... its sure to make the public piss and moan a bit considering what were paying for gas.